SACRAMENTO - California state senators heard arguments against a bill that could cost Kern County millions Tuesday.
Kern County Fire Captain Robert Hudson testified on behalf of the firefighter's union against Senate Bill 1017, which would create an oil severance tax at 9.5 percent on oil and 3.5 percent on natural gas to help education.
Hudson and opponents of the tax say it would result in a loss of property tax revenue, which is used to fund local services like firefighting.
"The businesses that support the oil industry could in turn be affected by not having that customer of the oil service industry in Bakersfield," Hudson tells 23ABC.
About 75 percent of the state's oil production is in Kern County, so the bill could cost the county tens of millions of dollars.
Last month Kern County Supervisor David Couch testified against the measure.
California is the nation’s fourth largest producer of oil, after only North Dakota, Texas, and Alaska, and it is the only one of 36 oil producing states that does not have a severance tax.
A severance tax is a tax imposed on the removal of nonrenewable resources such as crude oil, condensate and natural gas, methane and carbon dioxide.
"If it cost twenty dollars a barrel to produce oil and you add a ten dollar severance tax you just increase operating expenses fifty percent," says Kern County assistant tax assessor Tony Ansolabehere.
Alaska employs a minimum severance tax of 25 percent that can range up to 50 percent depending on the net value of oil and natural gas, while Alabama, Kansas, Texas, North Dakota, Mississippi, Oregon, and Florida tax oil and gas at 8 percent to 5 percent.
The bill passed through the Senate Education Committee and has moved on to the Governance and Finance Committee.
No hearing date has been set yet.
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